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More "drama" with Swatch case

There has been a further delay in the upcoming legal proceedings involving Swatch Australia and its former general manager Mark Watson after the case was again adjourned while the parties wait for Ministerial Consent for evidence to be heard.

Watson, who was forced to leave Swatch’s head office last November, said he was dismissed because he refused to enforce Swatch’s preferred retail price on stockists, a policy prevent retailers offering discounts on Swatch. Watson claims this would have been breaking the law. The case was listed for hearing in the Victorian County Court beginning February 1, but has been adjourned indefinitely.

A spokesman for Thexton Lawyers, the Melbourne firm acting for Watson, explained that some evidence Watson wanted to present in court included conversations that took place in Switzerland and the US.

In order to present such evidence in an Australian court, the Minister for Competition Policy and Consumer Affairs needs to give consent.

This is often the case involving situations where an activity is legal in one country, but deemed illegal in Australia.

Such issues, which fall under Section 5 of the Trade Practices Act (TPA), add to the already complex nature of the case. If Watson was indeed dismissed for refusing to enforce Swatch’s preferred retail price on retail stockists, he would have been breaking Australian law, but that does not mean the same laws apply in other countries; however, Watson and Swatch must comply with local laws.

The allegations by Watson of Swatch’s breaches of the TPA have also raised the interest of the Australian Competition and Consumer Commission (ACCC). Despite an ACCC policy that the watchdog neither confirms nor denies the existence of any investigations, Watson confirmed a lengthy and detailed interview took place.

He would not divulge any further details about the meeting.

“I am not sure what will happen from here (with the ACCC), but they have taken an active interest in the matter,” Watson said.

At the time of the scheduled hearing, the Minister hadn’t provided consent for the overseas evidence to be heard; however the Thexton spokesman said this was a “formality” and consent would be given soon.

A Treasury department document advises: “Subsection 5(5) of the TPA requires the Minister to grant a consent unless the Minister forms the opinion that the alleged conduct which occurred outside Australia was required or specifically authorised by the law of the foreign country and it is not in the national interest that consent be given.”

Watson’s Statement of Claim alleged that various Swatch overseas executives complained to him about discounting in Australia.

Specifically, the claim stated that these same executives directed and/or required Watson, at various times between 2005 and June 2008, to make it known to all Swatch retailers that Swatch would not supply retailers unless they agreed not to sell watches below their recommended retail prices and/or the Swatch store prices.

Such activity would be in breach of the TPA, which aims to prevent businesses “fixing, controlling or maintaining” prices, because it constitutes a “substantial lessening of competition”.

Watson said there was evidence to show that retailers were denied supply as a result of not adhering to Swatch’s pricing.

More reading:

First story: Ex-boss accuses Swatch of price-fixing

Second story: ACCC watches Swatch court case

Third story: ACCC interviews former Swatch boss

Fifth story: Swatch in trouble

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